LA Mansion Tax - Understanding Measure ULA
By Alex Mikoulianitch on August 08, 2023
Most luxury real estate buyers and sellers in Los Angeles may have already heard about the so-called "LA Mansion Tax."
Officially known as the Homelessness and Housing Solutions Tax or United to House LA (ULA) measure, the tax is aimed at properties that surpass a specific sale price, in this case, any real estate valued at over $5 million.
For many sellers, LA’s "mansion" tax can be a significant closing cost expense, so it’s essential to understand when it may apply. Below, the team from Prevu Real Estate breaks down everything homeowners and potential buyers should know about the ULA measure and how it works.
Key questions about LA Mansion Tax
- What is the LA Mansion Tax (ULA)?
- Who pays the LA Mansion Tax?
- How much is Mansion Tax in Los Angeles?
- Which properties are subject to the LA Mansion Tax?
What is Measure ULA?
Measure ULA, commonly referred to as the LA Mansion Tax, is a special transfer tax above and beyond the city’s base transfer tax, a regular closing expense paid at the final stages of a real estate transaction.
In this case, in addition to the base transfer tax, Los Angeles properties valued over $5 million may be subject to an additional transfer tax called the ULA tax.
It’s important to think of the new tax as a closing cost, as it is customarily paid out at the closing of a home or real estate purchase. Los Angeles homeowners interested in selling their luxury real estate in LA should work closely with their real estate broker to ensure they know what that closing expense may look like.
Who pays the LA Mansion Tax?
Under the current ULA measure, sellers are responsible for reporting and paying the "mansion tax" on the sale of their properties closing on or after April 1, 2023.
The base transfer tax, meanwhile, can sometimes be negotiated between the buyer and seller. Traditionally, it’s customary for the buyer to pay the Los Angeles County base transfer tax while the seller pays the California state transfer tax.
How much is Mansion Tax in Los Angeles?
To have a good idea of how to calculate the newer luxury mansion tax in LA, it’s important to understand how the base transfer tax works first, followed by the ULA tax. For a luxury home purchase over $5 million, the rate-based transfer tax would be calculated first, followed by the ULA measure tax, calculated based on percentage.
The City of Los Angeles charges a base tax rate of $2.25 per every $500 of a property’s value on all properties. Based on that rate, a home worth $6.5 million would carry a $29,250 base transfer tax. The United to House LA tax would then be charged in addition to the base tax but is calculated based on the home's final sale price.
As the measure currently stands, properties that sell for anywhere between $5 million and $10 million would be subject to an additional transfer tax of 4%. In comparison, properties that sell upwards of $10 million would carry a 5.5% ULA tax.
ULA tax rates and base transfer rates
| Conveyed Property Value | Base Rate | ULA Tax Rate | Total Transfer Tax Rate |
| $100 to $4,999,999 | $2.25 per $500 | 0% | 0.45% |
| $5,000,000 to $9,999,999 | $2.25 per $500 | 4% | 4.45% |
| $10,000,000 or greater | $2.25 per $500 | 5.5% | 5.95% |
Which properties would be subject to the LA Mansion Tax?
The Mansion Tax applies to Los Angeles properties that sell for over $5 million. This includes single-family homes, condos, townhouses, and commercial properties.
It's important to remember that the Los Angeles tax on luxury mansions and properties is calculated based on the final sale price. So, even if a property were listed for less than $5 million but sold for more due to a bidding war or any other reason, it would be subject to the Mansion Tax.
The Mansion Tax in Los Angeles is a significant factor when considering luxury real estate in the city. Working with an experienced real estate agent who understands the nuances of LA's luxury market and can guide you through the financial implications of your sale or purchase is crucial.
